After 17 years of building it up, Toronto pension fund OMERS is spinning off LifeLabs.
What happened: Canada’s largest medical testing company is being sold to New Jersey-based Quest Diagnostics for $1.35 billion, a deal that puts Canada’s lab testing industry almost entirely under U.S. control.
- Once the deal closes, LifeLabs will keep its Canadian headquarters, management team, and its own brand. It will also continue to store patients' health data in Canada.
- The only Canadian company in the running to scoop up LifeLabs, Vaughan-based Andlauer Healthcare Group, was reportedly outbid by a cool $100 million.
Catch-up: Like the grocery, airline, and telco industries, lab testing in Canada has become heavily concentrated. The big difference with this industry is that foreign companies, which don’t necessarily have the same incentive to reinvest profits in Canada, now hold a monopoly.
- Dynacare, the only real Canadian competitor to LifeLabs, is also owned by a major U.S. company.
Why it matters: Foreign companies taking control of any industry, let alone one that’s highly concentrated, can hurt local economies. With Canada’s two biggest medical testing firms now under U.S. ownership, much of the industry's profits will flow (and could stay) south of the border.—LA